Where we are in gold today

Gold's headed for a bubble, but it's not there yet
We've heard it all before. Gold was in a bubble two years ago when it hit $650 an ounce, and before at $500. Gold will hit bubble territory one day but we are not there yet.

This bull market, which began in 2001, is now some eight years old. We are beyond the stealth phase and into the awareness phase.

Institutions have woken up to it, investors have woken up to it â but not all of them. We are not at the mania phase yet, there is no "new paradigm". That will come in several years' time - perhaps as governments and central banks start to talk about returning to a gold standard or similar.

Institutions have woken up to it, investors have woken up to it â but not all of them.

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Like all the smart money like sovereign wealth funds, pension funds and endowments that "woke up" to commodities as an asset class in early 2008 and put billions to work in index linked commodity swaps?

Commodities never went through the classic bubble playbook with hordes of bus drivers and nurses quitting their jobs because they made millions in long dated crude oil options. And despite of all that the CRB/GSCI commodity indexes still dropped 65-70% within 6 months.

I believe we are in the "new paradigm" area. Find me one gold bear and one dollar bull on TV, WSJ.com, bulge bracket analyst or any other newsource(all classic sentiment indicators) and i`ll buy you a dodo bird egg omellette for breakfast tomorrow. Not to say we cannot go higher. But we are most certainly closer to the top than most think.

A popular upscale mall in south Florida closed a shoe boutique (which my wife loved) and instead put in a gold buyer store

I think gold is getting to a bubble stage
-there are gold commercials running 24/7 on evrey radio station
- everyone is talking about gold IRA why the fuck would you put something that produces no income in a long term retirement unless you expect an economic collapse and if that happens how long will tax shelters accounts last?
- nem just unwound all there hedges
- everyone knows the dollar is worhtless, or deficit is out of control yada yada, which means the pain will come if the FED raises rates.
- I get invites to gold parties at least once a week

this is getting to be 04/05 real estate mania.

I am not saying gold has topped, just that there is too much talk at this point, and its hard to seperate the fundamentals.

Gold's headed for a bubble, but it's not there yet
We've heard it all before. Gold was in a bubble two years ago when it hit $650 an ounce, and before at $500. Gold will hit bubble territory one day but we are not there yet.

This bull market, which began in 2001, is now some eight years old. We are beyond the stealth phase and into the awareness phase.

The real estate mania started in 2003, really moreso in 2002. It lasted all the way till 2006.

And it's funny to see so many think that gold buyer shops are a sign of the bubble. The public are sellers of gold, not buyers. They are also buying at ripoff prices to smelt and resell via fut contracts to smart money.

Like all the smart money like sovereign wealth funds, pension funds and endowments that "woke up" to commodities as an asset class in early 2008 and put billions to work in index linked commodity swaps?

Commodities never went through the classic bubble playbook with hordes of bus drivers and nurses quitting their jobs because they made millions in long dated crude oil options. And despite of all that the CRB/GSCI commodity indexes still dropped 65-70% within 6 months.

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Gold isn't a commodity, it's money.

But anyway, on a more serious note, gold has been known for underperforming the commodity class in the early stages of previous commodity bull markets last century and this one.

Which is quite logical when you think of it given the difference in fundamentals on going into gold VS wheat or oil for instance.

Ofcourse past performance does not guarantee future profit but I am sure everyone on ET is aware of that.

Commodities were just an example. My point was that anything - even gold - can crash 50, 60 or 70% without first going into a gigantic 5,000% mega bubble. These bubble play books may be interesting for psychologists but worthless for trading in my opinion.

Commodities were just an example. My point was that anything - even gold - can crash 50, 60 or 70% without first going into a gigantic 5,000% mega bubble. These bubble play books may be interesting for psychologists but worthless for trading in my opinion.

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So you wouldnt agree there was a correlation between the end of the world that finally had arived and one of the greatest stockmarket rallies in recent history?

You want to know why gold is not in a bubble? Ask anyone who knows nothing about investing, economics, or how money works if they would buy gold for 1150 per oz. 99% of them will tell you no, they would not. Now when these people that know nothing about investing, economics or how money works start buying gold...thats when you know its a bubble. Just like they did with housing.

But those people are not buying gold. They are selling gold to cash for gold people(at prices that probably equal about 300$ per oz, maybe less.) When those cash for gold places start going out of business, then start looking for a bubble because people are not selling.

Gold's headed for a bubble, but it's not there yet
We've heard it all before. Gold was in a bubble two years ago when it hit $650 an ounce, and before at $500. Gold will hit bubble territory one day but we are not there yet.

The moment I heard Peak Gold I said, Yupe we are in a bubble. There can be no peak gold because we have not run out of gold. It is just hamstered away in a hole in the ground. To run out of gold would imply no more gold, but that is not what we have.

Here is the rational of gold. You hamster it in a hole, so that you can say you have X billions. YET nobody spends it because the moment anybody spends gold, the price of gold collapses.

Remember the central banks of the world had to come to an agreement to only sell so much gold for fear that the price of gold would continuing collapsing.

Putting it simple. Gold is a pyramid scheme! Because the more that is hamstered the bigger the collapse will be once people start to spend it...

As I posted a few days ago, they believe there is 10-20kg of gold in every cubic Km of seawater. Gold is not limited, the higher the price, the more that will be unearthed and sold. And technology is relentless at cheaper, faster, deeper, more, etc.

You want to know why gold is not in a bubble? Ask anyone who knows nothing about investing, economics, or how money works if they would buy gold for 1150 per oz. 99% of them will tell you no, they would not. Now when these people that know nothing about investing, economics or how money works start buying gold...thats when you know its a bubble. Just like they did with housing.

But those people are not buying gold. They are selling gold to cash for gold people(at prices that probably equal about 300$ per oz, maybe less.) When those cash for gold places start going out of business, then start looking for a bubble because people are not selling.

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Those cash for Gold business are profitable because there is a demand for gold in pure forms and gold is worth 1000/oz but they will go out of business after gold collapses.

What happens to gold if Bernanke starts jacking up the rate?

I don't see gold being attractive when rates start to rise.

Right, now I agree there is money pumping killing the dollar and driving the price of gold.

Gold is moving because of the uncertainty around the dollar primarily. If the FED and Treasury decide to coordinate to prop up the dollar, Gold will be hit.

Remember the central banks of the world had to come to an agreement to only sell so much gold for fear that the price of gold would continuing collapsing.

Putting it simple. Gold is a pyramid scheme! Because the more that is hamstered the bigger the collapse will be once people start to spend it...

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What? Central banks had to come to an agreement to sell gold in an *orderly* fashion because prior to the original signing various central banks were dumping gold in a totally chaotic way. Selling anything in large quantities in a chaotic way would cause it to be devalued. You think tomorrow that if 9 of the 18 signatories to the Washington agreement dumped the USD that it wouldn't tank? This is not a property of gold that you describe, just basic supply and demand.

Furthermore, the latest renewal of this agreement has the signatories selling 100 tons *less* than before.